Troubles at Facebook continue this time as a new lawsuit has been filed in which Facebook investors claim Mark Zuckerberg sold more than $1 billion worth of the social networks stock just before prices started tumbling.

The class action lawsuit was filed by disgruntled Facebook shareholders who claim that the 28-year-old CEO and mega-billionaire knew the stock was grossly overvalued, at which point Zuckerberg unloaded his own shares to avoid furthering his own massive losses.

At the heart of the lawsuit is the argument that Facebook knew there was not enough advertising revenue to support a $38 stock valuation but hid that revenue information in order to push up the share price for the social networks initial public offering.

The lawsuit also claims that Goldman Sachs, JPMorgan and Morgan Stanley all pointed out the foundational flaw in Facebook’s IPO but that the social network only bothered to share that information with its largest investors through “selective disclosure” methods.

If Zuckerberg used information at his disposal and shared that information only with select groups of investors he could be found guilty of insider trading, although specifics about those details are not yet known.

Mark Zuckerberg has not been in the clear since selling off his shares, he has lost more than 25% of his wealth, although it is hard to feel sorry for a guy who has $15 billion in the bank.

I stand behind my previous comments that anyone who was valuing Facebook at Net 40-50 years was insane.

Do you think Facebook stock is still overvalued given the company’s flaws in revenue reporting?